Budgeting in Wonderland

One need not be intricately familiar with the tale of “Alice’s Adventures in Wonderland” to appreciate that the federal budget process has similarly become an alternate reality replete with sketchy characters, peril and the absurd. In the latest trip down the Beltway rabbit hole, a Republican-led Congress relied on Democratic votes to produce a two-year budget agreement that removed the limit on Uncle Sam’s credit card and increased spending now in exchange for offsetting spending cuts and revenue increases that will mostly occur 10 years from now. Well, that’s if future Congresses stick to the offsets.

Veronique De Rugy1

No, seriously.

Let’s start with the federal debt, which had been stuck at $18.1 trillion since March, thanks to the Treasury Department’s seemingly magical ability to keep it from breaching the government’s statutory limit on debt even though spending continued to outpace revenues all the while. Under the deal, the debt limit is suspended until March 2017, which means policymakers won’t have to sully themselves working on the debt problem any time soon.

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Regardless of the efficacy of the debt limit, one would think that chipping away at that $18.1 trillion of debt (equal to approximately $56,000 for every man, woman and child in the United States) would be the priority on Capitol Hill. But if Capitol Hill has a priority, it is to find a way to gather the votes to go deeper into debt — and to do so by spending even more of other people’s money.

It was that bipartisan desire to increase the flow of money coming out of the federal spending spigot that led to a budgetary framework that is as disingenuous as the grin on the Cheshire-Cat’s face. The deal busted limits on federal spending (for the second time) that policymakers had reluctantly put in place just four short years earlier. Although imperfect in design, the budget caps and their enforcement mechanism, sequestration, had actually imposed a modest degree of spending restraint. But like the debt limit, it appears that the limits on federal spending exist to be broken.

Capitulating to the White House’s desire to jack up spending and, consequentially, the federal debt, the Republican leadership resorted to the time-honored trick of using the Congressional Budget Office’s 10-year “score” of the legislation to make the claim that the additional spending is “paid for.”

Except that it’s not.

I won’t go into the weeds of how CBO scoring works. Non-budget wonks need only know that according to the score, of the $80 billion-plus in additional funding provided for the next two fiscal years, roughly half of it is to be “paid for” in 2025. If you’re asking yourself what’s to stop future Congresses from ignoring the pay-fors, move to the front of the class. Indeed, before the budget deal had even been signed into law, Republican leaders were already promising the members of Congress who represent agricultural interests that $3 billion in offsetting cuts to the federal crop insurance program will quickly be nixed.

Adding insult to injury, a review of the deal by the Committee for a Responsible Federal Budget found that the actual spending increase will be $154 billion and that only approximately half of that amount will be “legitimately” paid for. That’s because the deal’s authors employed a number of budget gimmicks that would be embarrassing to anyone who has any shame. But this is Congress we’re talking about.

If only it were all just a bad dream.

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

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